As you gaze upon your Thanksgiving feast this year, linger for a moment on the cranberry sauce. Those cranberries are lucky to make it out of the bog.
The cranberry industry collectively agreed to destroy one quarter of its crop this year – about 240 million pounds of berries – in an attempt to drive up prices.
The economics are simple: cut supply to drive up demand. But the policy is not. The practice of withholding or destroying crops to increase prices is called volume regulation. If that sounds shady, that’s because similar practices have landed other food industry executives in jail.
But in this instance, volume regulation is perfectly legal, writes The New Food Economy.
The Capper-Volstead Act, a nearly 100 year-old piece of legislature, exempts farmers from some antitrust laws. The act allows the Cranberry Marketing Committee and the Cranberry Marketing Order to ask the USDA to enact volume regulation measures when needed.
Before you feel cheated by the cranberry industry, you should know cranberries are a complicated crop whose economic history is less than stable.
In the 1950s, a pesticide used on cranberries in some parts of the country was found to cause tumors in rats, halving sales of the fruit across the country. Even after the pesticide threat passed, it took the cranberry industry years to recover.
But high demand is not always kind to the industry, either. In the 1990s, when studies showed cranberries prevent urinary tract infections and cosmopolitans were all the rage, cranberry sales soared, but farmers struggled to keep up with demand. Though they expanded their operations and planted more crops, cranberries take a few years to bear fruit. By the time they were ready to harvest, their popularity fell once again, leaving farmers with an excess of crops for years to come.
The current cranberry glut is the result of a similar cycle: increased sales in 2008 that fell again by 2010.
Experts say volume regulation isn’t the most cost-effective way to drive up prices. Cranberry farmers still have to invest time and money into growing and harvesting fruit that will ultimately never be sold.
So this holiday, have your cranberries, and a moment of gratitude that they exist at all.